Global CEOs shrug off grim headlines
Global CEs are brimming with optimism. Having shrugged off worries posed by, say, a Donald Trump presidency or Brexit, they are the most confident they have been in years about global growth prospects.
Expectations that global growth would improve over the next 12 months among nearly 1,300 CEOs interviewed by PwC between October and November 2017 was at the highest level since 2012.
"We have only to look past frantic geopolitical headlines to current economic indicators to understand the reason why. When all the data is in, 2017 will almost certainly turn out to be the best year the global economy has seen since 2010," PwC finds in its 21st annual global CEO survey, launched this week at the World Economic Forum (WEF).
The irony of releasing these findings at the WEF is that this year’s theme — Creating a shared future in a fractured world — recognises that large parts of the world’s population care not for positive economic data or, indeed, the outlook of C-suite executives.
"Economic prosperity and social cohesion are not one and the same," the WEF says of the theme of its 48th annual meeting, which seeks "to improve the state of the world".
Then again, the meeting is being held at a ski resort in the Swiss Alps, so make of that what you will.
The 41 South African CEOs interviewed for the survey were, unsurprisingly, far less optimistic about the global economy and their organisations’ short-term growth prospects (down 12 percentage points on the previous year) than the average.
You can’t help but wonder whether the results would have been slightly more positive had the survey been done post the ANC elective conference.
"It would be interesting to assess whether sentiment has changed," says PwC Southern Africa CEO Dion Shango.
Interestingly, most CEOs are less optimistic about their own organisation’s growth prospects than they are about overall economic growth — all except North American CEOs, that is.
"The Trump administration’s pro-business agenda of deep corporate tax cuts and rolled-back regulation has helped accelerate one of the longest stock market booms in history, while driving corporate confidence to new highs and jobless rates to new lows," PwC says in its report.
North American CEOs, which include those in the US and Canada, say organic growth, mergers and acquisitions and cost reductions will be major revenue drivers.
Globally, CEOs are worried about terrorism and geopolitical uncertainty, with overregulation and cyber threats also featuring prominently as risks to growth.
In SA, CEOs rate social instability, overregulation and unemployment as the top three risks.
In an unusual twist, global CEOs are more confident about short-term prospects than they are about the longer term.
"Typically, CEOs report more confidence in the longer term than in the immediate future," says PwC. While this is not necessarily a "harbinger of doom", it suggests that the rapid pace of political, economic and technological change makes it more difficult for CEOs to see beyond the near term.
This may also be explained by the fact that more than half the respondents have been in office for less than five years.
South African CEOs, on the other hand, are more confident about prospects for revenue growth over the next three years than the global average.
Then again, as Shango points out, "CEOs are generally in the business of being optimistic".